Tel Aviv: The startup city guide

Posted March 31, 2016. By Eoghan McNeill

You know the way every waiter in LA has a screenplay or showreel? They all have startups in Tel Aviv. At approximately one startup per 1,000 inhabitants, Tel Aviv is the most startup-dense city in Europe. You’re never far away from an entrepreneur.

When it comes to business, Israel and its capital overperform. When it comes to competing with the more traditional commerce powerhouses, a combination of fearlessness and the famous Israeli chutzpah help in a big way.

“We don’t fear success here. Fear of failure is not an option. You do whatever you can, and if you fail, you move on. You learn. Everybody looks to the big guys in New York, San Francisco, Silicon Valley and says, ‘Just because we’re small, it doesn’t mean we’re not better than them,” says Gossip Media Co-Founder Melanie Amini.

With the presence of multinationals such as Facebook, Google and Apple, and a recent flurry of acquisitions and IPOs, inspiration is easily found in Tel Aviv. In the years from 2009 to 2014, Israeli exit amounts increased by 980 percent, hitting a record $9.2 billion.

“People have seen these massive IPOs and acquisitions and think, ‘Wow. This tiny little country, we’re 60/70 years old as a nation, look at how much we’ve achieved.’ It definitely inspires people at an everyday level,” says Melanie.

Startup life in Tel Aviv

Even in a city with as many tech entrepreneurs as Tel Aviv, you’re still more likely to bump into someone in the industry in certain areas. Take a stroll down Rothschild Boulevard, the city’s most famous street and home to the Tel Aviv Stock Exchange, and you may just end up cutting a deal. It’s an open city.

“You’ll see partners and VCs in cafés. You can just walk in and have lunch with them. If you want to reach a certain investor then you pick up the phone, look up your LinkedIn or your Facebook friends, and you will find someone who knows the guy. People are willing to help. That’s something unique about working here,” says a Dvir Reznik, marquee freelance marketer based in Tel Aviv.

Tel Aviv became one of the first cities worldwide to roll out a free WiFi service in 2013 and this has contributed to the atmosphere of openness around its cafés, restaurants and bars. There’s a thriving café culture in the city, which has as much to do with coffee beans as it does to have with socialising.

Right on the border of Tel Aviv and Jaffa sits Cafelix, a coffee shop that sources and roasts their own beans. Drop in for a cup and you might just find yourself staying considerably longer, chatting to the founders who use the café as an almost second home.

“The cafés are very relaxed. You just sit there all day. Literally. And they won’t say anything to you. A lot of them are open 24 hours. It’s just that kind of culture,” says Melanie.

Behind the scenes at Tel Aviv’s Cafelix

Israeli entrepreneurs need to be open and outward looking – the size of their local market dictates it. Tel Aviv has a population of a little over 400,000. Their local market is 131 percent smaller than the European average and three times smaller than Boston. If startups in the city don’t have an international focus, they run out of customers fast.

They’ve proved adept at targeting international markets. Most startup founders in the city have a solid grasp of English and have built products with an international focus. The 2015 Startup Genome Report ranked Tel Aviv startups first in global market reach, with twice the percentage of foreign customers of Silicon Valley startups.

Even in a world of hyper-connectivity, being based in Tel Aviv – ten hours ahead of Silicon Valley – can prove to be a hassle. Scheduling conference calls results in someone on one end of the line either waking very early or staying very late. It’s a manageable problem, but can be troublesome, says Dvir.

“We have a lot of expertise in adtech, based partly on the knowledge that we have in online marketing and affiliate marketing, which is really somewhat of an accelerator for adtech companies. I think it may be a little ‘bubbly’ though. It’s a very tough business, based an old-school model of either CPM or CPC and it’s hard to compete for margins,” he says.

Michael Eisenberg, one of one of Israel’s leading VCs, has written about his worries for the Israeli adtech industry, saying that are simply too many companies and that “the music will stop soon”. Advertising is far from the only industry Tel Aviv startups excel in though.

The multinationals based in Tel Aviv have long recognised the potential of the city and have been a major catalyst in the ecosystem’s growth. IBM, Google, Intel and Amazon all have Tel Aviv addresses, while Facebook acquired data analytics startup Onavo in 2013, opening up a Tel Aviv office in the process.

Their presence and collaboration has been crucial.

“They bring capital, programmes, accelerators and mentors. These big companies have really become a part of the startup ecosystem here in Israel,” says Dvir.

It’s worth bearing in mind that in relative terms, the Tel Aviv startup scene is only getting started. Its grassroots began to emerge around the same time as internet economy, back in the early noughties. Since then it’s survived a number of shocks.

When the tech bubble burst, Israeli exports declined from $13 million to $11 million in 2002 and 2003. When the VC bubble did likewise in 2000, investments decreased dramatically in the country. By 2008 however, both markets had rebounded to post-2000 levels. And then some.

The Floor – This recently launched fintech accelerator connects startups to Asian investors and business development opportunities.Nautilus– The AOL accelerator. It provides startups office space and open access to AOL’s global network.Microsoft Ventures Accelerator Tel Aviv – This mentor-driven accelerator program aims to help top startups scale to global markets. The Elevator – A boutique incubator that focuses on helping startups reach market validation quicker. SOSA – South of Salame, or SOSA, is a community of Tel Aviv ecosystem leaders that has partnered with IBM, SAP, Microsoft Ventures, EY, PayPal and Orange.

The space at Tel Aviv’s SOSA incubator

Top media supporting Tel Aviv startups

Geektime – Considered the country’s top tech publication, Geektime is like the TechCrunch of Israel. They publish in both English and Hebrew – the Hebrew version pulls in 1.5 million+ unique views a month.Globes– Globes is Israel’s largest financial and business publication. It publishes a print newspaper and launched online in 1995. TheMarker– TheMarker publishes a daily economic newspaper as a supplement of Haaretz. They also publish a monthly economic journal and online.The Tube– A well-known television show .Give me a shout @AyeletNoff if you have a good story and would like some exposure – I have started doing a seven-minute spot on it covering startups around the world.Layla Calcali – Another television show on Channel 10 show, translated as ‘financial night’. They do a spot on startups. Ynet – Ynet originally launched in 2000 in Hebrew only before rolling out an English version four years later. It’s considered one of the top 1,500 sites worldwide by Alexa.

Top places for a night out

Jajo – Jajo is a wine bar housed in the historical building that once housed Israel’s first winery, on a hill within the recently restored site of Sarona in Tel Aviv. It’s surrounded by terraces where grapes were grown a century and a half ago.Bellboy – A cocktail bar in Hotel B on Berdichevsky Street that opened in 2014. Bellboy goes from 6pm till late. Herbert Samuel – Herbert Samuel is a restaurant and wine and cocktail bar sat right on the Tel Aviv seaside. Serious views of the Mediterranean sea while you eat or drink.

Get yourself to Jajo for the finest wine in Tel Aviv

Top restaurants

Toto – Located on Tel Aviv’s Berkovitch Street, Yaron Shalev’s Toto is the place to hit for a business lunch. Cantina – You’ll get some of the best Italian food in Tel Aviv in Cantina. Rotschild 12 – Sat right in the middle of startup hub Rotschild, this is a great spot for a casual breakfast in the morning or drink later on at night. Shila – Established ten years ago by Sharon Cohen and his wife Adi, Shila is a home for people who love to eat and have fun.

What’s your view of startup life in Tel Aviv? What have we missed? What are your recommendations? Let us know on Twitter @WebSummitHQ or in the comments below.

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